In December 2015, there were changes made to the real estate transfer tax exemptions in Michigan. If you did not qualify previously, but now qualify for an exemption under the new rules, you may go back up to four years and request a refund on the transfer taxes you paid.
So what changed exactly? On 12/16/15, governor Snyder passed a bill that simplified and clarified exemption "U". Exemption "U" applies when the SEV (State Equalized Value) at the time of the sale is less than or equal to the original SEV when purchased. The idea of this exemption is that if you sell your house at a loss, you do not pay transfer tax. The only other requirement is that the home was your primary residence.
Previously, the exemption had additional requirements regarding the "true cash value". This dictated that the purchase price could not be more than double the current SEV. As the market started to recover, the true cash value requirement made it difficult for people to qualify for this exemption, even though they were still selling their home at a loss.
WHAT THE HECK IS SEV?
SEV stands for State Equalized Value. Your assessed value (AV) is how your taxes are figured and is based on the value of your property. Generally this number is supposed to be approximately half of the market value of your home. Your assessed value is capped so your property taxes can never rise beyond a certain point after you purchase a house. SEV is similar to your assessed value, but it is not capped. If someone were to buy your home now, the SEV represents the assessed value for the new owner. Historically, SEV's have slowly increased over the years as property values rose. However, during the market crash, municipalities did lower SEV's to be in line with the lower property values. The SEV and AV may or may not be the same.
HOW DO I APPLY FOR A REFUND?
You can apply for a refund by filling out this FORM and following the instructions. You will need to provide 1) a copy of your settlement statement from when you sold the property, 2) a copy of the recorded deed containing the tax stamp, and 3) proof of the SEV when bought and sold. Most people keep their settlement statements as this is one of the most important documents when you buy or sell a home. If you do not have this, your real estate agent probably has a copy. As for the deed with the tax stamp, this is something you receive in the mail 3-4 weeks after you close on a property. The deed is a document that is signed at closing, then sent to the county for recording. Once it is recorded by the county, it is stamped and sent back to the owner. You might have this with your original paperwork when you purchased the home. If not, you can get copies from the county. When it comes to proving your SEV for the years you bought and sold, you can find this information in your title insurance policy (your real estate agent might have this too). If you do not have this, you can get a printout from the county or local municipality.
If you are not sure whether or not you qualify or have questions, please contact me. I am happy to take a look at your individual situation.
Great info on everything real estate.